Tuesday, January 7, 2020

Freight Forwarders, Shipping and Logistics Interests Need to Consider the Threat of Cyber Attacks

Useful Guide Published Illustrating Risk and Response
Shipping News Feature

UK – WORLDWIDE – Many companies, particularly those in service industries such as freight forwarding agencies, road and rail haulage outfits and indeed major shipping companies, are choosing to ignore a giant elephant in the room. That is the responsibilities they have to clients, not to mention their own staff, when it comes to that most 21st Century threat, lack of cyber security.

Ignorance feeds on this problem and many in the logistics field have simply chosen to ignore the immense damage caused to the titans of the industry such as the Maersk, COSCO and Clarkson hacks, which cost the principals billions of dollars to repair the damage and in loss of profits as a result of attacks in 2017/18.

In the course of our work here at the Guide we attend many events which cover the subject of cyber security in great depth and from every angle. What is always made clear is that there is simply no process in existence which can protect an individual or company completely against the threat. This however is not a lone factor in the world of international trade. Weather cannot be predicted or indeed any other natural, or man-made disaster.

So how does one deal with such a threat, from an unseen, malevolent enemy? Shipping has always faced situations beyond the control of the players and the answer is always the same, insurance. Cyber threats can be covered just as those we are more familiar with and this week one of the leading UK insurance companies in the maritime and logistics field, Peter Lole Ltd, has published a comprehensive guide (viewable here) as to what the myriad of risks are when a company is subject to an attack.

Firstly the insurer points out that a traditional commercial insurance policy is extremely unlikely to protect against most cyber exposures. Standard commercial policies are written to insure against injury or physical loss and will do little, if anything, to shield you from electronic damages and the associated costs they may incur. The possible exposures covered by a typical cyber policy may include the following:

  • Data breaches Access to data files can give away immense amounts of commercial and personal information
  • Business/Network Interruption For most companies the loss of computer systems would mean an instant disaster. Not only the replacement of hard and software but time and resources that normally would have gone elsewhere will need to be directed towards the problem. A rise in the number of denial of service attacks can reroute traffic to a different site or overload an organisations server.
  • Intellectual property rights Your company’s online presence, whether it be through a corporate website, blogs or social media, opens you up to some of the same exposures faced by publishers. This can include libel, copyright or trademark infringement and defamation, among other things.
  • Damages to a third-party system If an email sent from your server has a virus that crashes the system of a customer or the software your company distributes fails, resulting in a loss for a third party, you could be held liable for the damages.
  • Cyber Extortion
  • This speaks for itself and is an increasingly worrying threat. Rather than the physical risk of attacking a ship at sea, a determined hacker can hijack a system with the associated threat of destruction to weigh against the payment of ransom.

So a Cyber Liability Insurance policy should be tailored to your own specific needs, the potential threats should result in a policy suitable for your company and discussed with your insurance provider or with Peter Lole on +44 (0)1628 532 613.